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Sri Lanka’s Supreme Court has suspended a sale of shares in national PTO Sri Lanka Telecom (SLT) held by Japan’s NTT, pending a corruption probe. The Japanese operator recently agreed to sell a 25% stake in SLT to the Usaha Tegas group, which controls Malaysian operator Maxis Communications. NTT currently holds a 35% stake in SLT and has a management contract which would end if its stake drops below 10%. The Sri Lankan government owns 49.5% of the telco and has appointed a committee to work out a new management agreement with the Malaysian group. However, the court suspended the deal on the grounds of a lack of transparency, and set a new hearing date for 17 September. The decision followed a petition brought by former government minister Sripathi Sooriyarachchi, which alleged that the sale would result in unacceptable losses to the government and the country.

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EconomicTimes writes…Aircel Cellular, India’s fifth largest GSM service provider, has lost its management brass, ET has learnt. According to sources, Aircel CEO Jagdish Kini and its CFO Ganapathy Subramaniam have already tendered their resignations while the company’s legal council head Rajinder Singh is also set to leave.

(Malaysian telecom major Maxis Communications holds a controlling stake in Aircel. In December ‘05, Maxis had acquired 76% stake in the C Sivasankaran-promoted company for $1.1 billion in partnership with the Chennai’s Reddy family)

When contacted over the issue, Mr Kini confirmed the developments. Mr Kini had joined Aircel Group as CEO in October 2006. Prior to that, he had worked with various global FMCG companies such as Procter & Gamble, Parke Davis, L’Oreal and Gillette (West Asia and Asia), in addition to working with Bharti Airtel.

Sources said that Mr Kini, who is currently based in Bangalore, had tendered his resignation since he was unable to relocate to either Chennai or Delhi to oversee Aircel’s India operations. On the other hand, its CFO Subramaniam is leaving to relocate to Mumbai, sources added.

At the same time, there is also speculation in the industry that the exit of Aircel’s top executives is related to Hutch-Essar’s former deputy managing director Sandeep Das taking over Maxis’s CEO in Malaysia. Hutch and Aircel are competitors in the GSM space in India.

However, this could not be independently confirmed. Besides, Aircel executives also denied that this factor had any relation with their leaving while adding that they were exiting the company due to personal commitments.

Sources also added that Mr Kini, while keeping his corporate options open, was headed back to the consulting firm — Enterprise 5c, which he had started before joining Aircel. For Aircel, the exit of top executives comes at a crucial time. Maxis, which had invested Rs 2,700 crore in Aircel during the last fiscal, has announced an invest over Rs 2,000 crore in the company in 2007-08, and has also set a target of reaching 8 million subscribers during this period.

Aircel, which currently offers services in 9 telecom circles, had paid Rs 1,350 crore to the Department of Telecom (DoT) towards entry fee for licenses in 14 new circles in the country. It is expected to have a pan-India presence by 2009. Recently, it was also awarded national and international long distance licenses by the DoT.

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Telegeography writes…Malaysia’s Maxis Communications has reported a 51.5% increase in fourth quarter net profit on the back of rising domestic sales and a burgeoning customer base in India. Net profit for the three months ended 31 December 2006 increased to MYR642 million (USD183 million) compared to MYR425 million a year ago, while revenue improved by 25.8% to MYR2.12 billion from MYR1.68 billion in 2005. The firm’s Indian wireless subsidiary Aircel contributed 9.7% of total group turnover in the fourth quarter, a figure it expects to increase to 10% in 2007. ‘We are expecting [Aircel’s] subscriber base to almost double to eight million by year-end,’ group chief executive officer Datuk Jamaludin Ibrahim told a news conference in Kuala Lumpur yesterday.

For the full year 2006 Maxis’ net profit and revenue increased by 27.6% and 20.9% to MYR2.1 billion and MYR7.71 billion respectively. It recorded a net loss of 795,000 domestic subscribers during 2006, as a result of the government’s implementation of a pre-paid registration scheme, but this was cushioned by Aircel’s net addition of 709,000 subscribers.

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After months of rumor, innuendo and articles based on anonymous sources Associated Press has reported that Vodafone CEO Arun Sarin “said that his company will soon make a firm bid for Hong Kong-based Hutchison Whampoa’s controlling stake in a leading Indian mobile phone company�. He’s in India at the moment talking to the government about a purchase (there are issues with the level of foreign ownership of Indian companies), and has reportedly approached Hutchison with an offer that values the Indian operations at between $17-18 billion. Some Vodafone shareholders have expressed concern that the company will get caught up in a bidding war that will see it overpay for Hutchison Essar, so it will be tricky for Sarin to raise that offer if he needs to.
Essar, the minority partner of Hutchison Essar, is also interested in bidding and claims it has first right of refusal. Hutchison Whampoa disputes this, claiming that “Essar’s right of refusal ‘exists in a limited case of a sale to certain specific Indian telecom operators…Essar has ‘no right of first refusal over any other buyers’.â€? Essar claims it has first refusal rights against any bid, which seems to set the stage for a legal showdown. 
The other parties interested in bidding are Reliance Telecommunications (India’s second-largest mobile company) and the Hinduja Group (also looking for a stake in Telecom Italia) from India, while Maxis Communications of Malaysia and Orascom of Egypt have also expressed an interest. Private equity groups have probably pulled out, saying they would not bid more than $15 billion.
Vodafone’s formal bid will be some time in February if Sarin gets his way.

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yahoo writes…Reliance Communications, India’s second-largest mobile phone company, began lobbying the government Thursday for a chance to bid for rival Hutchison Essar, a day after Britian’s Vodafone said it also wanted a controlling stake in the company.
Reliance Communications Ltd. Chairman Anil Ambani met Finance Minister P. Chidambaram and Communications Minister Dayanidhi Maran to discuss the matter, officials in the two ministries said. The officials spoke on condition of anonymity because of the sensitive nature of the issue.

Shares of Reliance Communications rose 4.8 percent to 426.90 rupees in Thursday’s trading on the Bombay Stock Exchange.

Ambani refused to speak to journalists after the talks.

His meetings came after the board of Reliance Communications on Wednesday authorized him to raise funds and “take all necessary steps” for a possible acquisition of Hutchison Essar Ltd., a joint venture between Hong Kong-Based Hutchison Whampoa and India’s Essar Group.

Hutchison and its associates hold 67 percent in the company and want to exit.

On Wednesday, Vodafone Group PLC’s Chief Executive Arun Sarin said the world’s largest mobile phone company hopes to make a formal bid for Hutchison’s controlling stake in the Indian company in early February.

Vodafone emerged a front runner last week after making an approach that reportedly valued all of Hutchison Essar Ltd. at between US$17 billion (euro13 billion) and US$18 billion (euro13 billion), which would make it the biggest-ever corporate takeover in Indian history.

Sarin, who met with top government officials Wednesday, refused to comment on any offer price or details of how the company planned to raise money for the proposed acquisition.

A successful acquisition of Hutchison Essar would help Vodafone gain a strong presence in one of the world’s fastest growing mobile phone markets.

It is also a crucial move for Sarin, who has come under fire from shareholders in recent months for a lackluster performance of Vodafone’s stock and a widespread perception that the company still lacks a credible strategy for further growth.

As of Nov. 30, Hutchison Essar accounted for 16 percent of India’s 143 million mobile and wireless phone connections. India has been adding 4 million or more new connections each month over the past one year.

Sarin told reporters Thursday that his company was to several Indian firms to partner in a possible bid.

India doesn’t allow foreign companies to hold more than 74 percent equity in a telecommunications venture. If the Essar Group, which holds 33 percent stake in Hutchison Essar, also decides to sell its stake, any foreign buyer of the enterprise will have to rope in a local partner.

Sarin declined to name any potential Indian partner.

For Reliance Communications, a successful bid will make it the leader of the country’s booming mobile phone market.

The company has appointed JP Morgan Chase and two other investment banks to scrutinize the books of Hutchison Essar, said the Dow Jones Newswires quoting an unnamed industry source.

Besides Vodafone and Reliance Communications, the London-based Hinduja brothers also have expressed interest. Malaysia’s Maxis Communications Bhd. and Egypt’s Orascom Telecommunications are also reported to be in the race.

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Malaysia’s Maxis Communications group saw its revenues and net income grow in the first half of the year. Group revenues totalled MYR 3.62 billion, up from MYR 3.1 billion in the first half of 2005. Net income rose 16 percent to MYR 960 million, from MYR 831 million in H1 2005. EBITDA rose 6 percent to MYR 1.84 billion but the EBITDA margin dropped 5.1 percent to 50.9 percent due to start-up costs of Natrindo Telepon Seluler in Indonesia, lower mobile termination fees as well as higher sales and marketing costs. Growth was driven by performance in the Malaysian market, as well as the contribution from newly acquired Aircel, a mobile operator in India. Aircel contributed MYR 234 million to revenues and added 3.2 million subscribers to the group’s total of 11.7 million mobile customers. Maxis Communications set a gross dividend of MYR 0.1042 per share.

Source- http://www.telecompaper.com

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